Since the title of this thread asks why the song is popular here, I'll chip in and suggest that one of the main reasons is because it was the song that got Katy more noticed (e.g. Madonna dropping Katy's name and her love for the song in a radio interview). That might be the reason she still performed it at the CDT. It's probably special to her because it was like the beginning of the One of the Boys era before I Kissed A Girl really blew up. That or they just like the song. They can't help it if their ears like it I guess.
I know a few people might be offended by it but I do know gay men and lesbians who love the song and just see it as funny and almost satirical.
Same goes for I Kissed a Girl, which some lesbians found offensive for "fetishizing" their sexuality, the same song which I watched a lesbian couple dance to jokingly at their own wedding.
What I'm trying to say is it all boils down to the person. There's nothing wrong with being offended by something; everyone has that right. If something like this song offends someone personally, then that's them. It doesn't mean everyone else feels the same way. I think it all depends on how someone interprets the song.
No one is forcing you to like the song. You don't like it and that's totally fine, there's just no point in arguing about something when it comes to personal taste because it will just go nowhere.
We should all just chill and listen to this (relevant) song: https://www.youtube.com/watch?v=S9VAQBClVNA